Question

I would like to propose my company (Airbnb) to penetrate to another country by piloting in Istanbul, Turkey.

Potential Competitors

Identify companies that:

• have business activities similar (or related) to the business opportunity you are proposing; and
• operate in the country that you are considering for your international business enterprise.

Competitive Advantages

Discuss the competitive advantages of these companies. (For example, some companies may gain a competitive advantage as a result of access to raw materials, others may gain an advantage through the use of technology for production and distribution or as a result of a well-known brand name.)

Based on the country (or countries) you are analyzing for your global business enterprise, research information related to the following areas:

Government and Politics

Describe the type of government and recent political developments that could influence the economic and business environment of the country. (For example, various events in recent years in the Middle East have contributed to uncertainty when doing business with some countries.)

Formal Trade Barriers

Identify formal trade barriers (tariffs and other taxes, foreign exchange controls, ownership restrictions) that might require a company to adapt its business strategy.

Intellectual Property

Discuss the country’s regulations to protect intellectual property, such as brand names, copyrights, patents, software, music, videos. (Some countries do not enforce these laws resulting in the pirating of products and lost profits for companies.)

Answer 1

Potential Competitors

Lodging industry in Istanbul is quite extensive, given it is a popular tourist destination. Below could be your top 5 competitors:

- homestay.com

- hsh-sisli.com

- booking.com

- hotel-istanbul.net

- makemytrip.com

Competitive Advantages of these competitors

If we look at the competitive advantages of these companies as against a new entrant to the market, we have to categorize the competitors as global service providers and local service providers.

Global service providers such as booking.com/ makemytrip.com/ homestay.com have huge network and tie-ups with international hotel brands, and Istanbul being the capital city and a major tourist destination, has a list of international hotels. Other advantages of these global companies are they have experienced marketing team, great online selling platform, funds in abundance to invest in a new location, and they keep growing in size with the mergers and acquisition with/of the local vendors.

On the other hand, the local service providers have better reach to the homestay options. The localites prefer tying up with the domestic companies, given the convenience and trust factor coming into place. If we compare the global companies with the domestic ones, we can see that the budget hotels/ homestay options are widely available with domestic companies than the global ones.

Government and Politics

Turkey has a unitary government structure and the provinces are subordinated to the center. Recep Tayyip Erdogan, the president of Turkey, his party has lost elections in Turkey's two major cities - Ankara and Istanbul. Erdogan has been ruling for close to two decades and if there is a change in government during the next election (to be conducted in 4 years from now), it could be a game-changer and the economy could take a new twist. Turkey's economy has weakened consistently under Erdogan. Country has tumbled into recession in March, unemployment exceeds 10 percent and inflation has reached 20 percent.

Formal Trade Barriers

Turkey is a member of the WTO and regulates its customs in line with General Agreement on Tariffs and Trade (GATT) requirements. While generally in compliance with the WTO agreement, Turkey often fails to notify the WTO of changes to import requirements. When this occurs, companies' views are often not taken into account, nor are they given ample time in which to comply and adapt to changes in how they do business. These changes to import requirements can serve as non-tariff barriers such as implementation of reference price systems, lack of control certificates, new burdensome documentation requirements and unnecessary and intrusive requirements.

Intellectual Property

Turkish Intellectual Property Law has been thoroughly revised and amendments have been two years ago. The new IP code came in force in January 2017. It replaced a patchwork of laws and decrees with a single, clear framework. The 2017 IP code did not merely consolidate existing Turkish IP law, but it also added new provisions, including the introduction of co-existence principle.

Turkey Government has prepared a draft law to block illegal movie streaming websites and platforms that illegally provide copyrighted artwork.It suggests the creation of a center that will have the authority to close websites streaming illegal content. Furthermore, websites will have to undertake procedures at the center in order to legally distribute copyrighted material. The draft law will also allow artists to file lawsuits against the illegal providers of works.